FHFA says settlement reached with GE in mortgage case
NEW YORK (Reuters) - General Electric Co (GE.N) has agreed to settle a federal agency's lawsuit accusing it of misleading Freddie Mac into buying $549 million of mortgage-backed securities, the Federal Housing Finance Agency said on Wednesday.
The settlement is the first from a series of lawsuits the FHFA filed against Wall Street banks in 2011 in its role as conservator for Fannie Mae and Freddie Mac.
The lawsuit against GE named subsidiaries including financial services unit GE Capital. Terms of the accord were not announced.
"This settlement resolves the dispute between FHFA and GE consistent with FHFA's responsibilities as conservator of Freddie Mac," Alfred Pollard, the agency's general counsel, said in a statement. "FHFA is pleased this lawsuit has been resolved and appreciates the work of Freddie Mac in this matter."
Russell Wilkerson, a spokesman for GE, declined comment.
The FHFA's lawsuits claimed that GE and 17 other financial institutions were to blame for Fannie and Freddie's losses on more than $200 billion in mortgage-backed securities.
The lawsuits are among the myriad cases filed since the 2008 financial crisis by investors, insurers and regulators against banks that packaged home loans into securities. The lawsuits generally have accused the banks of misrepresenting the quality of loans.
In the GE case, the FHFA accused the company of making inaccurate statements in the offering materials for two mortgage-backed securities sold to Freddie Mac in 2005.
The lawsuit has been pending in U.S. District Court in Manhattan. A court filing Wednesday showed that the FHFA was voluntarily dismissing the case.
The remaining defendants in the cases are awaiting a ruling in the litigation by the 2nd U.S. Circuit Court of Appeals. The appeals court is weighing whether to reverse a decision by U.S. District Judge Denise Cote that allowed the FHFA's case against UBS AG (UBSN.VX), a test case for the wider litigation, to continue.
GE shares closed Wednesday down 7 cents at $21.94 on the New York Stock Exchange.
The case is Federal Housing Finance Agency v. General Electric Company, U.S. District Court, Southern District of New York, 11-07048.
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